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Problem 5-68 Perpetuities and Effective Interest Rate (LO3) What is the value of a perpetuity that pays $100 every 3 months forever? The interest rate quoted on an APR basis is 6%.
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Problem 5-68 Perpetuities and Effective Interest Rate (LO3) What is the value of a perpetuity that pays $100 every 3 months forever? The interest rate quoted on an APR basis is 6%.

User Avand Amiri
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1 Answer

4 votes

Answer:

The answer is $6666.67

Step-by-step explanation:

Quarterly interest rate = 0.06/4= 0.015

PV of Perpetuity = PMT/i= 100/0.015 = $6666.67

User Cnicutar
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